Rupee snaps three-day losing streak, up 15 paise against US dollar

NEW DELHI: Snapping its three-day losing streak, the rupee appreciated 15 paise to 68.08 against the US dollar in early trade on Friday.

The domestic currency had declined 18 paise to settle at a fresh 29-month low of 68.23 in the previous session on firm dollar demand from banks and importers.
Currency markets globally were expected to take cues from policy reviews by central banks.

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On Wednesday, the US Fed acknowledged that the US economy was slowing down and expected the policy rate to rise only gradually. A slew of weak US data releases including the one on durables orders released overnight has raised chances that the next rate move may not come at least in the March policy review.

The dollar index, which tracks the movement of greenback against a basket of six major world currencies, stood at 98.60.

On Friday, Bank of Japan (BoJ) was scheduled to review its policy. Data showed Japan's January industrial production (preliminary) fell 1.4 per cent, compared with a 0.90 per cent degrowth in December. Household spending too fell. The spate of weak economic numbers may push the Japanese central bank to announce some stimulus later in the day.

At home, the Reserve Bank of India (RBI) too will review money policy on Tuesday. While most economists expect a status quo on policy rate, there remain few who expect a 25 basis points rate cut.

“We continue to expect RBI governor Rajan to cut 25bp on February 2, with inflation set to meet his under-6 per cent January 2016 mandate. The RBI, however, will find it difficult to cut rates beyond 25-50bp. Real policy rates are already negative, using 7 per cent medium-term CPI inflation as a proxy for inflation expectations,” said BofA-ML in a report.

Meanwhile, most Asian currencies advanced on Friday. Malaysian ringgit climbed 1.11 per cent to 1.46 against the US dollar. Taiwanese dollar rose 0.50 per cent. Indonesia rupiah (up 0.20 per cent), Japanese yen (up 0.13 per cent), Singapore dollar (up 0.07 per cent) and Korean won (0.07 per cent) inched up.

The rupee has fallen 3.05 per cent and has been the worst-performing Asian currency so far this year.